By Tamara Pupic
Doha Bank chief also says framework needed to address project and contract financing challenges
A high level banking official has called for the development of infrastructure bond market for project finance, speaking at a conference in Doha.
Dr R Seetharaman, CEO of Doha Bank, added that banks needed a framework to address project-and contract-financing challenges.
“We also need to bring long-term investors such as pension funds and insurance and mutual funds into the GCC project market. Project entities can issue bonds during the construction phase, and banks refinance the bonds upon projects getting operational. On the whole, Qatar and GCC should develop infrastructure bond market for project finance,” he explained at a conference held at the St Regis Hotel in Doha.
Seetharaman also mentioned key challenges faced in projects-and contract-financing in the GCC. “The release of payments to contractors beyond the agreed time even against consultant certified invoices,” he said.
“This in turn affects payment to subcontractors and impacts project profitability. Reluctance to assign proceeds or give irrevocable assignment letters to financing banks; absent this, banks have no certainty on project cash receipts to appropriate for settlements.”
“Banks are partners in the projects. In certain instances, they are the last to know of any concerns and disputes among the owner and contractor.”